Lender cancels $12,000 loan owed by woman forced into debt by abusive partner

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A lender has canceled $12,000 owed to it by a woman in debt from an abusive partner, after she complained about the loan to a financial dispute resolution service.

Although the lender had done nothing wrong, he could see that the right thing to do was to release the woman from debt, said Susan Taylor, chief financial services complaints officer.

It is one of four approved service programs where people can complain about how they have been treated by insurers, banks and other lenders.

The lender had made a loan to the woman, who was receiving a benefit, to buy a vehicle.

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The car was for her abusive partner, who had a bad credit record and couldn’t get a loan in her own name.

The Responsible Lending Code requires lenders to closely monitor people who may have been coerced into taking out a loan, but Taylor said there was no “red flag” for the lender.

Economic harm is an underrecognized form of domestic violence, but it is becoming increasingly well known as activists and advocates, including Good Shepherd, push to raise its profile.

Advocates are calling on the government to make economic abuse a form of domestic violence in its own right – rather than a subset of emotional abuse, as is currently the case in the Domestic Violence Amendment Act.

Stacy Squires / Stuff

Advocates are calling on the government to make economic abuse a form of domestic violence in its own right – rather than a subset of emotional abuse, as is currently the case in the Domestic Violence Amendment Act.

Bank of New Zealand and some other lenders canceled debts of victims of economic abuse.

“The woman’s bank statements showed regular benefit income but did not show any of the usual living expenses,” Taylor said.

The woman seemed to spend all her money on discretionary items.

When the agent for the lender, the car dealership, asked her why she didn’t seem to be paying the usual rent, electricity or living expenses, she explained that she lived with her parents and had no so not any of those costs, Taylor said.

The loan was arranged through a car dealership, and the dealership took note of his conversation with the woman and gave it to the lender.

In calculating the affordability of the loan, the lender included notional amounts for the woman’s living expenses and calculated that she could afford the repayments.

Susan Taylor, managing director of Financial Services Complaints Limited, asked the lender to waive the debt, and it did.

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Susan Taylor, managing director of Financial Services Complaints Limited, asked the lender to waive the debt, and it did.

After six months, repayments ceased when the woman fled her abusive relationship and could no longer afford to repay the loan.

Her abusive partner had kept the car and she had transferred ownership to her name, fearing he would receive traffic fines that she would have to pay.

She was pregnant and in hiding, fearing her former partner would find her, Taylor said.

The lender, who stopped charging fees and interest, was unable to repossess the car and sell it to reduce the debt it owed.

The woman complained to the FSCL with the help of her mother, who could not understand how the lender could have thought the loan was affordable in the first place.

The lender, whose name is being kept secret as part of the complaint process, told Taylor he could not know the woman’s personal situation and believed he had fulfilled his responsible loan obligations.

He offered a repayment plan, but the woman’s mother said she had no disposable income to make payments.

Taylor did not believe the lender failed to lend responsibly.

“The moneylender could not have known that (the woman) was being manipulated by her abusive partner into borrowing money,” she said.

Taylor asked the lender to cancel the debt, which he did.

The Responsible Lending Code 2020 requires lenders to be on the lookout for vulnerable borrowers who are under significant pressure from another person to take out loans.

Economic abuse is “the weaponization of money” by a controlling intimate partner, says AUT researcher Ayesha Scott.

Financial abuse researcher Dr. Ayesha Scott says women are the most common victims of economic harm and abuse, but men are also victims.

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Financial abuse researcher Dr. Ayesha Scott says women are the most common victims of economic harm and abuse, but men are also victims.

This can involve many abusive behaviors; denying the victim access to accounts, information, and decision-making rights, severely restricting their shopping choices, and holding them accountable for every penny spent.

Abuse can continue even after a victim has escaped from a relationship, if she has been forced to incur debts for her partner, for example by buying her a car.

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